This may be of interest Ian > Proactive Money > > by Flemming Funch, 9 April 95. > > I was just pondering how the concept of money can make sense at all in an > information economy, and I've got some ideas. > > Before the arrival of agricultural societies money wasn't needed. Hunters > and gatherers would simply take what they needed or wanted, fight for it > if > necessary, and continuously move on to where they could find the resources > they were seeking. > > In "first wave" agricultural societies surpluses would be produced. The > land > would be worked to produce food stuff and what is produced is either > stored > up or it is traded. Trading would open the need for money as a means of > exchange. Also, it suddenly became important what you HAVE, what you own. > If > you have land you can grow stuff and sell it. If you have produce you can > sell it. Power and affluence is measured by how much you currently own. > > The "second wave", the industrial revolution, centralized production and > brought about the need for a lot of machinery and buildings that needed to > be in place BEFORE something valuable was produced. That brought about the > need for financing, for somehow having or borrowing money before you could > create more. And then the monetary value of what you produced is in part > based on the need to recuperate the investments made, and the costs of the > resources that had to be acquired to put into the product. As opposed to > agricultural production, industrial production requires that you get stuff > from elsewhere that you can build your products of and with. Money comes > to > symbolize what is OWED for the previously used resources that went into > what > you are paying for. Wealth is based on how much you have produced in the > past that you are now being owed for. > > The "third wave", the information society, changes the equation again, > even > though the change isn't fully realized yet. Information and knowledge do > not > have mass or weight. They can potentially be arrived at instantly and they > can in principle be replicated any number of times without any use of > resources. What becomes important is not what happened before, but what > happens AFTER a piece of information is generated or distributed. The > value > of an idea is in what it allows you to do, not in the amount of trouble it > took to arrive at it, nor in its value as a possession of yours. > > But our economic system is still based on second wave principles. Our > currencies are still defined by the amount of debt they represent. Our > financial institutions are based on the financing of production that then > is > owed for and needs to be repaid with interest by the proceeds from trading > with the production. > > Information products fit poorly into this scheme and it creates friction > and > unnecessary hindrances to their use that they are treated by the old > industrial model. For example, the concept of intellectual property is an > attempt to treat information as material products. > > If a factory produces a car, a certain amount of materials go into it and > it > is in itself a very tangible product. It will always be worth something in > that there is a limited number of cars and raw materials and there is a > need > for both. It is quite workable for the car factory to expect to get back > what they've spent on making the car, and then some, in exchange for > granting somebody the privilege to take possession of the car. That person > would after all be able to trade further with the car, as it has value in > itself. > > A knowledge product, such as a software program, works quite differently. > It > can be reproduced with no incremental cost and without any resources > required by its original manufacturer. Potential users will of course > quickly discover that they themselves can manufacture a fresh instance of > a > software product. > > A car manufacturer could probably care less if you went home and > constructed > a copy of his car in your garage, because he knows that he gets paid for > the > resources and work he puts into the production of his car. A knowledge > worker can not have the same assurance and might have impossible > difficulties ensuring that he will get his investments in time and > resources > back, because he has nothing tangible to show for it. Somebody might help > him installing some kind of police state methods of monitoring how people > use his product so he can be paid, but that is really only stalling the > inevitable conclusion. > > Information providers, such as copyright owners, software producers, or > artists running around angrily trying to stop people from using their > information without paying for their past work, is a sign of the economics > no longer being in tune with the methods of production and distribution. > > The fact of the matter is that information inherently can be reproduced > infinitely and there is no inherent value in simply owning it, or in > having > worked hard at it. There is only value in using it. > > If instances of information in themselves had value, all one needed to do > to > be rich would be to duplicate them a zillion times. It is nonsense of > course. Making repeated copies of a software program on your harddisk > doesn't produce any wealth. > > We can not measure the worth of information by the resources that went > into > producing it earlier. An idea that it took a second to generate might > revolutionize the world. A 50 million dollar movie might be an unwatchable > flop. > > Producers have no inherent right to be compensated for what they did just > because they did it. A car maker doesn't expect to get anything more than > what people are willing to pay for each instance of his product, and if > that > isn't more than what he spent making it he will go broke. An information > producer in an industrial society economy can't expect to be treated any > different. That is, he will be paid for each instance of his product what > people are willing to pay, and if he doesn't succeed in paying his debts > he > will go broke. > > The concept of having to be paid for what one did earlier is no longer > valid > in the natural 3rd wave economy. It will probably go out kicking and > screaming before it is replaced with a new scheme. > > "Pay me if you want my property" is 1st wave thinking. The most > appropriate > currency for that is one that converts into tangible property in a > predictable manner, such as gold. > > "How do I get back my investment?" is 2nd wave thinking. Dollars, defined > inherently as debts to the banks, are likewise 2nd wave currency, destined > for obsolesence. > > "What can I do with my knowledge?" is 3rd wave thinking. It is no longer > about being paid for what you have or what you spent. It is how can you > spend the resources you have in the most productive way. > > Existing information is free and infinitely reproducable so there is no > need > to ration it and charge money for it or own it. The most valuable services > in an information society is to produce/invent something NEW or to show > people the way to what is already there. We're talking not only of > information, but of adding value TO information. Information itself will > be > without inherent value in an advanced information society. Getting new > information that you need when you need it is what is valuable. > > How do we account for new useful information and services being made > available? Do we need to account for stuff at all? > > There is really no big need to account for existing information, as it > isn't > limited. The same with creativity. It isn't limited and is impossible to > quantify. What we CAN quantify and account for is anything that is in a > limited supply. > > As more and more resources get transformed into an unlimited supply they > will no longer need to be accounted for. For example, if we need some kind > of fuel to create electricity with, and there is a finite quantity of it, > we > need to account for it, as well as for the electricity produced. But, if > for > example we make solar panels ubiquitous, available for anybody, and since > sunlight is for our purposes inexhaustable, we don't have to account for > either. > > For a 3rd wave economy we need a currency that doesn't reflect ownership > or > past work, but that stimulates future creative work. > > A more natural 3rd wave type of money would be something that doesn't > attain > value before one spends it in a productive way. It would be present or > future oriented, rather than oriented towards the past. It is an > expression > of what one finds use in or one's prediction of future benefits. > > We could regard that kind of money as a voting system for what one finds > of > value, rather than as an enforced exchange of scarcities. > > Information and benefits are potentially unlimited. It therefore doesn't > make sense to match them up with a scarce, limited medium of assigning > value. The valued currency should be able to expand to match the value of > the benefits that are experienced, rather than the estimated values having > to be shrunk to the supply of currency available. > > How exactly to do that, I don't know. And how to combine that with a > medium > that can be used to acquire goods that actually ARE scarce and limited in > supply, I don't know. > > But, it is apparently to me that the current money systems are not very > helpful in creating a better future where all of our needs are met, and it > is not very practical as a measure for what is actually valuable in our > lives. > > We need new money that is proactive, that freely supports a desirable and > viable future, rather than money that is reactive, only representing past > acts and acquired possessions. > > Currently only banks can use money pseudo-proactively, creating it by > lending it out. But that is done with some heavy strings attached, and the > inherently impossible condition that more money needs to be paid back than > what is given out. That equation doesn't add up in that only banks can > create money and they all need to be paid back more than the money that > they > give out. > > We probably need a system where anybody who creates or perceives value > also > creates money, and the money is not a loan to be paid back, but a gift to > be > passed on. > > In such a system new projects would be financed, not by borrowing money, > but > by gaining the trust of others who will believe in the project and > voluntarily give money to it, because they want to see it happen. Or by > producing value that people will feel like rewarding, thereby funding > further production of value in the same vein. > > That is not possible with scarcity money, but only with money that people > can freely give without experiencing a personal loss from doing so. Money > that gains value from being used on something desirable, and that retains > no > value from being kept. > > - Flemming >
